‘Big, beautiful bill’ passage hastens threat of American economic crisis

Balancing this budget is going to require very hard choices, which is why his vote for the One Big Beautiful Bill Act (OBBBA) is so infuriating.

He, along with other so-called “fiscal hawks,” just voted for and passed one of the most expensive, deficit-increasing bill in modern American history, which clocks in at a staggering $4.1 trillion in deficit financing once you include interest costs.

And we are getting to the point where this is endangering the country.

Government debt service grows, and here’s who benefits — and who doesn’t

Credit: Handout

Credit: Handout

We are now spending almost $1 trillion annually on interest payments alone — more than we spend on national defense. Political scientists point to this metric as one of national decline because this means that fiscal pressure may undermine our ability to defend ourselves as a nation, much less be a “superpower.”

Credit rating agencies, like Moody’s, look at debt payments as a share of total revenue. At $1 trillion, debt service consumes 20% of every tax dollar we pay to the federal government — and this is projected to rise to 30% even without the OBBBA. By way of reference, the average state spends 6% of its revenues on debt service.

Why is this metric important? Because it indicates whether a governing body has enough basic revenues to finance critical services, as well as to make key investments to support future economic growth and development. This metric was cited by Moody’s when they downgraded our debt from AAA to AA1.

But with OBBBA, when tax cuts are on the table, money is no object, and the future is not important.

Who gets the benefits of the tax cuts and spending increases? The Congressional Budget Office (CBO) estimates that the billionaire class gets around $300,000 in tax breaks — a rounding error for the Elon Musks and Jeff Bezoses of the world. Families in the “upper quintile” who make $300,000 or more will get on average around $10,000 — that is nice.

More middle-income families might get a couple thousand, but this bill defrays some of its costs by reducing the subsidies for student loan programs and using some “death by paperwork and deadline” strategies to reduce the availability of health insurance on the exchange — benefits widely used by middle-class families in Georgia. Meanwhile, CBO estimates that for those in the lowest quartile of income (families making less than $30,000 a year), resources will decline by $1,600 on average because of cuts to Medicaid and food stamps.

Even as it runs up the deficit by staggering amounts, the OBBBA is crushingly unfair in who gets the goodies and who bears the cost.

U.S. is headed toward a trifecta of challenges and difficult decisions

Credit: Eric Lee/The New York Times

Credit: Eric Lee/The New York Times

Meanwhile, over the coming years, the vise of debt and demographics are going to start to squeeze all of us in the middle class. Interest rates are ticking higher to finance the debt, and this trickles down directly into our lives in the form of higher mortgage and credit card interest rates. Economic models of the OBBBA show economic decline rather than growth from tax cuts because the debt puts such an intense drag on the economy.

On the spending side of the ledger, our population is aging. Social Security, federal health care programs and interest on the debt already make up around 60% of our federal budget and will account for 87% of the growth over the next decade.

The major trust funds that support the Social Security and Medicare programs are going to run out of money in less than eight years. These events will trigger an automatic across-the-board cut of 23% percent to Social Security benefits and 11% across-the-board cuts to Medicare Part A, unless Congress legislates to change the situation.

While no one knows when the crisis will come, everyone knows we cannot continue this way. Someday, we are going to have to pick our poison: face major tax increases, reform entitlement programs or face a major economic crisis. Most likely, we are going to sip from each cup. And OBBBA hastens the day when we will have to make this choice and pay the price for the profligacy of this nation.

Carolyn Bourdeaux is a former member of Congress from Georgia’s 7th District. She is also executive director of the Concord Coalition and Concord Action, organizations dedicated to education and advocacy in support of fiscal responsibility.